After Friday’s rally, global stock markets ended the week in the positive column. The S&P 500 was up 0.68%, while the NASDAQ rose 0.93%. International markets recovered somewhat with the MCSI Emerging Markets Index ending the week 0.78% higher.
Your Bull Market Alert portfolio had a mixed week. Your energy bet Holly Frontiers (HFC) soared 11.64% and is now up 23% since you bought it. You sold half of your shares and half of your remaining options last week for a gain of 82.68%. This week, I am recommending that you sell both your remaining shares and options in HFC for gains of 23.00% and 146.34%, respectively.
Other positions ending in the plus column were Plum Creek Timber Co. Inc. (PCL), up 1.86%, last week’s pick Fomento Economico Mexicano SAB (FMX), climbing 1.84% and PowerShares Listed Private Equity (PSP), continuing its streak of weekly rises with a gain of 1.49%.
Your biggest loser was Spanish bank bet Santander (SAN), which ended the week down 6.13% on disappointing earnings. I continue to believe that we’ve seen the worst behind us, and that any substantial pullback is a buying opportunity.
This week, I am also recommending that you sell your positions in Michael Kors Holdings Limited (KORS) and Discover Financial Services (DFS), as well as the related options at a slight gain and loss, respectively. Neither stock has really been able to break out to the upside, despite positive fundamentals. So, I’d rather replace these two recommendations with better opportunities in the weeks ahead.
In addition, over the past week or so, I have been recommending that subscribers across all of my trading and investment services take some profits.
The one-way direction of the market, coupled with its low volatility, is making me nervous. The S&P 500 is also nearing a long-time point of resistance that goes back all the way to 2006 and the peak of the dotcom boom in 2000.
I also wanted to highlight some work done by sentimentrader.com. The firm’s unweighted version of a model that monitors advisor and investor sentiment surveys is now at a point that has been exceeded only three other times in 25 years — in June 1997, March 1998 and December 2004. In all of these cases, stocks struggled over the next three to six months.
That doesn’t mean it couldn’t be different this time around. But the plethora of one-way thinking is making me more cautious than usual.
Bank of Ireland (IRE) dipped 2.78% over the past five days, touching its 20-day moving average (20MA). Fitch Ratings affirmed its “Stable Outlook” rating for Bank of Ireland last week and upgraded its Viability Rating by one notch to a ‘b.’ This positive news, coupled with IRE’s recent correction and 20MA touch, should spell good news for IRE’s chart. IRE is a BUY.
National Bank of Greece SA (NBG) dipped 1.84% last week. Greek market regulators extended a standing ban on the short-selling of Greek banking stocks last week until the end of April 2013. This takes a good amount of downward market pressure off of your position in NBG, further tipping the scale to the bullish side. NBG remains a HOLD.
PowerShares Listed Private Equity (PSP) gained another 1.49%, closing its sixth straight winning week. With nearly $300 million dollars in assets under management, PSP is the single-best way for you to profit from the lucrative gains that many private equity firms enjoy. PSP is a BUY.
Qihoo 360 Technology (QIHU) fell 4.66% last week on negative news that Apple removed some of Qihoo’s iOS apps from the iTunes store without explanation. QIHU issued a statement saying the app removal was a temporary situation caused by iTunes policy changes. QIHU did manage to hold its short-term $30 support level with a strong show of technical chart support. QIHU is scheduled to report earnings on Feb. 21. QIHU is a BUY.
Plum Creek Timber Co. Inc. (PCL) rose 1.86% over the trading week. PCL reported earnings last Monday, jumping on good news, pulling back slightly, and managing to end the week with a gain. PCL reported Q4 earnings of $0.49 per share, handily beating analyst estimates of $0.24 per share. Revenue jumped 12.3% year-over-year to $354 million, beating the $300.73 million analyst estimate, as well. PCL is a BUY.
Banco Santander, S.A. (SAN) fell 6.13% last week after issuing a negative earnings report due to increased capital requirements and loan loss provisions. That said, the bank’s chairman noted that with the exceptional write-offs now behind Santander, the bank should see a marked increase in earnings in 2013, based on the group’s recurrent revenues and cost controls. He also confirmed a dividend payment amounting to 9.6% annual yield — higher than previously estimated. SAN is a BUY.
Fomento Economico Mexicano SAB (FMX) gained 2.48% for its opening week in your portfolio. FMX will report earnings on Feb. 27. FMX’s last earnings report came in strong, with earnings surging 19.8% and revenue growing 19.5% year-over-year. FMX is a BUY.